DWF Labs found that US spot Bitcoin ETFs experienced net withdrawals during seven of eight declines of at least 15% since their January 2024 launch. The study examined 694 trading days ending October 16. DWF Labs recorded a record $8.2 billion in withdrawals during Bitcoin's 28.8% decline between May and June 2026. The study recorded $6.9 billion in withdrawals during the October 2025-February 2026 downturn, when Bitcoin lost almost half its value. Those withdrawals exceeded the $3.4 billion redeemed during the January-April 2025 correction, challenging expectations that institutional adoption would provide dependable buying during market stress.
DWF Labs found continued ETF withdrawals at seven of eight market bottoms and continued purchases at seven of eight peaks, suggesting flows reinforced prevailing trends. The study found that five of eight corrections experienced their largest withdrawals in the five trading days immediately before Bitcoin reached a bottom. During the May-June 2026 decline, daily withdrawals averaged $412 million in the last week. Investors withdrew funds on 88% of trading days during that correction. All nine rallies of at least 15% attracted net inflows, with seven experiencing their strongest purchases in the five sessions immediately before the peak.
The May-July 2024 correction was an exception, attracting $2.2 billion in ETF inflows despite Bitcoin's 21.8% decline. That decline coincided with Germany's government liquidating holdings and Mt. Gox creditors receiving repayments, with ETF demand absorbing some additional supply. ETFs still lost an average of $40 million daily during Bitcoin's April 2025 rebound, despite Bitcoin gaining 9.7%. Daily inflows later increased to $436 million after prices had recovered, illustrating institutional investors' tendency to wait for established recoveries. Approximately $1.2 billion entered ETFs on one of their largest inflow days at Bitcoin's October 2025 peak, shortly before an extended decline.
DWF Labs measured a 0.54 correlation between ETF flows and Bitcoin's preceding five-day performance, versus 0.03 for subsequent five-day returns. The same-day correlation was 0.41, indicating co-movement without establishing whether ETF demand caused price changes. Bitcoin rose during the next 20 days after only 51% of sessions in the highest 10% for inflows, versus 57% across all trading days. BlackRock's iShares Bitcoin Trust (IBIT), the largest Bitcoin ETF, accumulated $65.6 billion in net inflows during the study but provided little additional predictive value. IBIT flows had a 0.04 correlation with subsequent five-day returns, and Bitcoin rose over the following 20 days after only 47% of IBIT's largest inflow sessions. Some ETF purchases represent transfers between funds or hedge funds buying ETF shares while shorting Bitcoin futures to exploit price differences without taking directional exposure.
DWF Labs found that Bitcoin declined over the next 20 days in eight of 12 cases involving unusually large ETF withdrawals while Bitcoin moved less than 1%. Returns after those sessions were 10.7% weaker than after sessions with similar preceding price trends. However, the negative results clustered around three major selloffs, reducing the pattern's reliability for trading.
The median daily pace of Bitcoin selloffs slowed to 0.69% in the ETF era, versus 1% in 2022-2023 and 1.37% in 2021. Corrections of at least 15% became less frequent, averaging about 2.9 annually versus 4.4 in 2022-2023 and 8 in 2021. Annualized volatility declined to 47% from 55% in 2022-2023. Daily crashes of roughly 7% became less frequent, falling from six annually to two. However, the median ETF-era correction reached 21.3%, versus 19.4% in 2022-2023. DWF Labs identified deeper liquidity, more diverse investors and regulated hedging tools, including CME futures and ETF options, as possible contributors to those changes. Bitcoin volatility had begun declining before the ETF launches.
DWF Labs estimated that CME futures basis trades may have hedged approximately one-fifth of ETF flows. Leveraged funds' net short exposure subsequently fell from approximately 116,000 BTC in December 2024 to 29,000 BTC. DWF Labs estimated that closing those positions could explain much of the January-April 2025 ETF selling, but at most roughly one-quarter of withdrawals in the two largest later declines. That finding suggests more recent withdrawals increasingly represented investors reducing Bitcoin exposure.
DWF Labs found that after Bitcoin dropped 7% below its 20-day high, average daily ETF flows over the next five trading days changed from $74 million entering to $72 million leaving. ETF selling increased in 19 of the 24 episodes studied. Flows generally moved back toward neutral during the following two weeks. Bitcoin ETFs have accumulated $57.96 billion in net inflows. The 12 products manage approximately $110 billion in assets.
Bitcoin ETFs See Net Withdrawals in 7 of 8 Major Selloffs Since 2024 Launch
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Summary
Bitcoin analysis shows US spot Bitcoin ETFs saw net withdrawals during seven of eight declines of at least 15% since their January 2024 launch, according to FLASH AI and DWF Labs. The study, covering 694 days through October 2026, noted $8.2 billion in withdrawals during Bitcoin’s 28.8% drop in May-June 2026. ETFs recorded continued outflows at seven of eight market lows and inflows at seven of eight highs. Despite this, Bitcoin selloffs have slowed in the ETF era, with median daily declines falling to 0.69% from 1% in 2022-23. Bitcoin news highlights ongoing investor behavior shifts amid increased institutional presence.
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